The reality to the issue of physical copies versus digital copies is that both have their pros and cons. The primary reason Microsoft was interested in their controversial approach to a game console is because they were focused on the pros of digital distribution. In short, gamers could take any game, even those bought as a physical copy, and take their collections anywhere without having to physically move every game. Even more interesting was the idea that you could easily share your games with friends, even if those friends didn't live anywhere near you.
The point of this post is not just about video games. We have seen this debate all over the place. Ultraviolet is another good example of digital distribution taking on a greater role. Before that, we saw the rise of MP3's as a replacement for CD's. Of course, digital music players (other than the iPod) allowed us to embrace a form of digital distribution that allowed us to make physical copies as backups. MP3's and other forms of DRM-free digital distribution allows customers to buy content digitally and maintain a physical copy if they desire.
Neither digital distribution nor physical copies is definitively better than the other. Ultimately, the best comes down to the variability of individuality and personal preference. I want to break down some of the differences between these two distribution approaches.
Financial
Costs can be variable. Usually but not always, digital distribution is cheaper. For music and TV shows, you have more flexibility to buy just the songs and episodes that you want. A lot of digital distribution platforms such as Steam have sales that can save quite a bit of money. A big drawback for digital distribution is that ownership is locked in. There is no second-hand market. You can't sell things that you no longer want, and you can no longer buy used products at a discount. Personally, I don't care much for trade-ins because I have not had good luck with the condition of used products.
Convenience
It's faster to load content from a disc than to download the same thing. If you have physical copies handy, they are usually more convenient for first-time usage. If you install of copy anything from a disc, it can be an inconvenience to have to grab the disc to verify ownership.
If you are away from home, it is unlikely that you carry your collections with you. Digital distribution allows for access to all of your content whenever you have access to a compatible device. In a sense, you are always carrying your possession with you without having to make an effort.
Physical Storage
If you buy a lot of CD's, Movies, and games, you are going to have to find space for everything. Some people might have no problems finding a spot for all of their possessions. Others are going to prefer to minimize the amount of space these things take up in their homes. Digital distribution only takes up space on your storage device (hard drive, memory card, internal memory, etc). You can also delete products if needed, and they will remain available to you online for no additional cost. In this regard, Digital distribution has a definitive advantage.
Internet reliance
If I'm going to share a definitive advantage of digital distribution, I might as well include a definitive advantage of physical copies. All digital distribution requires an internet connection for the initial download or to stream. Physical copies work regardless of your internet status. While the internet has become more reliable over the years, there are still possibilities of service provider issues and failures of network hardware.
Some forms of digital distribution require an internet connection as a DRM measure to prove ownership. These products will not work if your internet connection is down. Streaming is even worse. Any hiccups in you internet connection can mess up whatever content you are consuming.
Security of ownership
This is a frequently cited advantage of physical copies, but this is actually another trade-off. The idea we hear most is that digital distribution puts you at risk if the service providing the products ceases operations. This is an overstated but real risk. Most companies would find buyers for their services and/or customers if they had to go out of business, especially for the better established platforms. For example, I don't think there is any question that someone would buy Steam if Valve went out of business. DRM-free products can seriously mitigate the risk since you can create physical copies as backups.
Ultraviolet could be viewed as an attempt to decrease risks of digitally distributed movies and TV shows. Ultraviolet maintains a list of titles you have purchased. That list is accessed by various streaming services. By decentralizing the streaming services associated with the platform, the platform itself has a lower risk of failure.
Unfortunately, physical copies aren't nearly as safe as people think they are. Physical copies can deteriorate over time, and you are more at risk of theft and disasters. Some people have the contents of their homes insured, but this is not always the case. Additionally, digital distribution is more likely to maintain access to everything while some physical copies might become impossible to find if anything happens to your originals.
The reality here is that there is no way to guarantee that you won't lose your favorite products.
Quality
Quality with most products is comparable in regards to the two distribution methods being discussed. Computer and video games will use the same code with different security measures attached. Movies are more likely to increase compression for the sake of reducing bandwidth consumption. I would say that quality will usually benefit physical copies when quality varies. While there hasn't been much of a history of quality improvements online, the fact that you already have a registered copy could make quality upgrades easier for those who are streaming.
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